GBP/NZD Exchange Rate Dips as UK Government Prepares for Brexit ‘No-Deal’
The Pound New Zealand Dollar (GBP/NZD) exchange rate is down today, and is currently trading at NZD$1.8439 after Downing Street ramped up preparations for a possible ‘no-deal’ Brexit, leaving Pound (GBP) investors skittish.
The New Zealand Dollar (NZD) meanwhile was bolstered by yesterday’s release of the Westpac Q4 consumer survey which showed an increase of 109.1 against last quarter’s 103.5, bolstering confidence in New Zealand’s economy ahead of the festive season.
However, the New Zealand Dollar (NZD) has been weakened on concerns that China’s economy is slowing after regional manufacturing figures have reportedly ‘gone missing’.
The UK government’s Brexit contingency plans have weakened the Pound (GBP) against the New Zealand Dollar (NZD), with worries that British Prime Minister Theresa May’s UK-EU withdrawal agreement is unlikely to gain the backing of Parliament.
Brexit Secretary, Stephen Barclay, commented:
‘Preparing for a no deal will be an operational priority within government but our overall priority is to secure a deal.’
Pound New Zealand (GBP/NZD) Exchange Rate Falls as Positive Inflation Data is overshadowed by Brexit Concerns
The Pound (GBP) was further weakened today with the publication of the retail price index for November which decreased to 0.0% against last month’s 0.1%.
Today also saw the release of November’s Consumer Price Index for November, which increased as expected to 0.2% against last month’s 0.1%, lending some strength to the Pound (GBP).
These were overshadowed by increasing market concern over Brexit, as Theresa May once again rallies against an increasingly fractious Parliament after the opposition leader, Jeremy Corbyn, tabled a ‘no-confidence’ vote against her on Monday.
This was followed by a comment today from the British Chambers of Commerce which released a statement commenting:
‘The lack of progress in Westminster means that the risk of a no-deal Brexit is rising. With just 100 days to go, the suggestion that no deal can be ‘managed’ is not a credible proposition.’
NZD/GBP Exchange Rate Rises Despite China’s ‘Missing’ Manufacturing Data
The New Zealand Dollar (NZD), however, was weakened by today’s news that China’s export hub, Guangdong, had stopped releasing economic indicators due to Chinese authorities deeming it ‘illegal’.
Zhang Ming, a former political science professor from Remnin University, commented:
‘It’s possible that the situation is more serious than previously thought or that they want to prevent a panic. . . They are worried about chaos. But in barring the media from reporting, things may get more chaotic.’
Later on today will see the release of New Zealand’s trade balance figures for November, and with any sign of an increase could further strengthen the NZD/GBP exchange rate.
These will be followed by the important publication of Q3 GDP figures which are expected to decrease, potentially denting the ‘Kiwi’.
GBP/NZD Outlook: Brexit and US-China Trade Tensions to Remain in Focus
The GBP/NZD exchange rate is likely to be driven by political factors in the coming week, with the slowing down of data stats ahead of the festive season and Brexit and US-China trade tensions remaining in focus before the New Year.
Looking ahead to tomorrow, the Bank of England is due to release its interest rate decision with GBP investors paying close attention to any signs of bearishness.
Tomorrow will also see the publication of UK retail figures for November which are expected to increase, potentially providing a leg-up for Sterling.
The ‘Kiwi’ may benefit from New Zealand’s printing of the credit card spending figures for November tomorrow, with any significant increase improving sentiment in New Zealand’s economic outlook.
With no noteworthy ecostats in the pipeline for New Zealand until after Christmas, the GBP/NZD exchange rate is likely to be driven by Brexit news as Parliament is expected to vote on Theresa May’s withdrawal agreement in the New Year.
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